THE MALAWI GOVERNMENT MINISTRY OF AGRICULTURE Agriculture Sector Wide Approach-Support Project II IDA PROJECT NUMBER P164445 PROJECT FINANCIAL STATEMENTS For the year ended 30June 2021 HE MALAWI GOVERNMENT-MINISTRY OF AGRICULTURE GRICUL TURE SECTOR WIDE APPROACH-SUPPORT PROJECT II DA PROJECT NUMBER P164445 ROJECT FINANCIAL STATEMENTS ~ or the year ended 30 June 2021 IND EX The Controlling Officer's report 1-2 Statement of Controlling Officer's responsibilities 3 Independent auditor's report 4-5 Statement of cash receipts and payments 6 Notes to the statement of cash receipts and payments 7-11 Supplementary information 12-14 ~E MALAWI GOVERNMENT-MINISTRY OF AGRICULTURE GRICUL TURE SECTOR WIDE APPROACH-SUPPORT PROJECT II i A PROJECT NUMBER P164445 HE CONTROLLING OFFICER'S REPORT or the year ended 30 June 2021 irhe Secretary for Agriculture has the pleasure in submitting this report together with the project financial statements of he Ministry of Agriculture - ASWAp SP II project for the year ended 30 June 2021. he Ministry overview: griculture Sector Wide Approach-Support Project II (ASWAp II) is a three-year project being implemented by the Ministry of Agriculture with a total grant of USD55, 000.000 .00 . The financing ag reement was signed between the Republic of Malawi and the International Development Association on 13 April 2018. Project objective The Project development objective (PDO) is to improve the productivity and market access of at least four selected commodities for small-holder farmers in the project districts. Project components The project has four components as follows: Component 1: Sustainable agricultural productivity and diversification Component 2: Improvement for rural road infrastructu re for market access Component 3: Institutional capacity development for NAIP Component 4: Project coordination and management Cross cutting issues The project is mainstreaming gender, nutrition , climate smart agriculture and res ilience throughout its components. Regarding gender, the project will help close the gender gaps in the areas of productivity and access to agriculture inputs and services. It will also seek innovative ways to reduce the women's work burden . In line with National Nutrition Policy and Strategic Plan , the project will support interventions aiming at improving production and utilization of nutritious foods . The project will further create synergies with Bank interventions to improve nutrition (under preparation) e.g. nutrition sensitive agriculture pilot project and Investment in Early Years for Growth and Productivity. The ASWAp-SP II project is also supporting climate smart agriculture and resilience through climate sma rt and environmental practices, such as promotion of climate change resi lient crops, sustainable land management practices and integrated pest management practices . Climate smart practices to minimize production risks and enhance resilience will be integrated within activities under crop diversification and productivity . Th is report covers the aud it of project's financial statements for the ASWAp SP II project for year ended 30 June 202 1. Financial performance: The results of the project are set out in the accompanying project financial statements , significant accounting policies and explanatory notes. 7. !~~~~t~~~~~~~~~~~b~M~N~~~~~~~-:~:~~URt.,:~:~JECT II A PROJECT NUMBER P164445 i T E CONTROLLING OFFICER'S REPORT (CONTINUED) F r the year ended 30 June 2021 egistered office and physical location: ~inistry of Agriculture 7ihe Second Agricultural Sector Wide Approach (ASWAP SP II), .O. Box 30134 , ; apital City , !LILONGWE 3 ndependent auditor: ~rant Thornton Chartered Accountants and Business Advisors (Malawi) ~namwino House P.O. Box 30453 Capital City LILONGWE 3 Bankers: Reserve Bank of Malawi The independent auditors, Grant Thornton Chartered Accountants and Business Advisors have indicated their willingness to continue in office as auditors for the ensuring financial year. S-A--CA.__u.-_ 0\..A. CQ___ SECRETARY FOR AGRICULTURE \¾ _ -------'-&- DIRECTOR OF FINANCE Date _ __ )~, I d. 1 2021 2 HE MALAWI GOVERNMENT-MINISTRY OF AGRICULTURE GRICUL TURE SECTOR WIDE APPROACH -SUPPORT PROJECT II DA PROJECT NUMBER P164445 STATEMENT OF CONTROLLING OFFICER'S RESPONSIBILITIES For the year ended 30 June 2021 It is the responsibility of the Controlling Officer to prepare and fairly present the project financial statements for each fi nancial period which presents fairly in all material respects, the state of affairs of the project as at the end of each period and of the operating results of that period . The Controlling Officer is required to ensure the project keeps proper accounting records which disclose with reasonable accu racy at any time the financial operations of the project and enable them to ensure that the project financial statements comply with the Public Finance Management Act, 2003 and International Public Sector Accounting Standard ("IPSAS") - Financial Reporting under the Cash Basis of Accounting . In preparing the project financial statements, the Controlling Officer accept responsibility for the following : - • the provisions of the Public Finance Management Act, 2003 are complied with ; • advice on financial management is provided to the responsible Minister; • all accounts and records relating to the functions and operations of the project are properly maintained; • all necessary precautions are taken to safeguard the collection and custody of public money; • there is no over-expenditure or over-commitment of funds and a review is undertaken each month to ensure that there is no such over-expenditure or over-commitment. • all expenditure is incurred with due regard to economy, efficiency and effectiveness and the avoidance of waste and that the expenditure is incurred in line with project financing agreement; • all necessary precautions are taken to safeguard project's resources. • an effective system of internal control is developed and maintained and, unless the Secretary to the Treasury approves otherwise in circumstances provided for in Treasury Instructions, an effective internal audit function is developed and maintained. The Controlling Officer accept responsibility for taking such steps as are reasonably open to them to safeguard the assets of the project and to maintain adequate systems of internal controls to prevent and detect fraud and irregularities. The Controlling Officer is of the opinion that the project financial statements present fairly in all material respects , the operating results of the project. The auditor is responsible for reporting on whether the financial statements are fairly presented in accordance with the International Public Sector Accounting Standard ("IPSAS") - Financial Reporting under the Cash Basis of Accounting . Approval of project financial statements / The project financial statements for the project was approved for issue on the ______~ S-- /1. ___ _ _ 2021 and Y- ~ is signed on its behalf by : SECRETARY FOR AGRICULTURE DIRECTOR OF FINANCE 3 Grant Thornton An instinct for growthN INDEPENDENT AUDITOR'S REPORT TO THE SECRETARY FOR AGRICULTURE - AGRICULTURE SECTOR WIDE JiPPROACH-SUPPORT PROJECT II IDA (PROJECT NUMBER P164445) ON THE Grant Thornton ! NANCIAL STATEMENTS OF THE PROJECT, Malawi Chartered pinion e have audited the project financia l statements of the Ministry of Agricultu re -Agriculture Accountants and ector Wide Approach-Support project II !DA project number P164545 as set out on Business Advisors ages 6 to 11 wh ich comprise the statement of cash receipts and payments fo r the year Nurses C ouncil Building nded 30 June 202 1, and the notes to the project financial statements, including a New C apita l C ity summary of sign ificant accounting policies . Centre In our opinion, the project financial statements present fairly , in all material respects, the P.O. Box 30453 financial position of Ministry of Agriculture - Agriculture Sector Wide Approach-Support Lilongwe 3, Malawi project II (IDA project number P16445) as at 30 June 202 1 and of its cash receipts and disbursements for the year ended 30 June 2021 in accordance with the Intern ational Public Sector Accounting Standard (" IPSAS") - Financial Reporting under the Cash Basis T +265 01 773 855 of Accounting. T +265 01 773 371 Basis for opinion email: mw-info rmotion@mw.gt.com We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are fu rther described in the Auditor's responsibilities for the audit of the Project financial statements section of ou r report. We are independent of the Ministry of Agricu lture- Agricu lture Sector Wide Approach-Support Project II (IDA project number P16445) in accorda nce with the International Ethics Standards Board fo r Accountants' Code of Ethics for Professional Accountants (IESBA Code) and we have fulfilled our eth ical responsibilities in accordance with the IESBA code. We believe the aud it evidence we have obtained is sufficient and appropriate to provide a basis for our opinion . Basis of accounting and restriction on distribution and use Without modifying our opinion , we draw your attention to Note 2.1, which describes the basis of accounting. The project financial statements are prepared to provide a fi nancial report to Ministry of Agriculture in line with the prog ram agreement. As a result, the project financial statements may not be suitable for other purposes. Other information The Controlling Officer is responsible for the other information. The other information com prises the Controlling Officers' Report, Statement of Controlling Officer's Responsibilities and Supplementary Information . The other information does not include the project financia l statements and our auditor' s report thereon. Our opinion on the project financial statements does not cover the other information and we do not express an audit opinion or any fo rm of assurance conclusion thereo n. In connection with our audit of the project financia l statements , our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the project fin ancial statements, or our knowledge obtained in the audit, or otherwise appears to be materially misstated . If, based on the work we have performed , we conclude that there is a material misstatement of this other information , we are req ui red to repo rt that fact We have nothing to report in th is regard . Responsibilities of the Controlling Officer for the project financial statements The Controlling Officer is responsible for the preparation of the project financial statements that presents fairly, in all material respects, in accordance with International Public Sector Accounting Standard ("IPSAS") - Financial Reporting under the Cash Basis of Accounting, and for such internal control as the Ministry determine is necessary to enable the preparation of the project financial statements that are free from material misstatement, whether due to fraud or error. In preparing the project financial statements , the Controlling Officer is responsible for assessing the program ability to continue as a going concern , disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Ministry either intend to liquidate the program or to cease operations, or have no realistic alternative but to do so. 4 T)HE MALAWI GOVERNMENT-MINISTRY OF AGRICULTURE AGRICULTURE SECTOR WIDE APPROACH-SUPPORT PROJECT II A PROJECT NUMBER P164445 DEPENDENT AUDITOR'S REPORT (CONTINUED) or the year ended 30 June 2021 r: ~uditor's responsibilities for the audit of the project financial statements /our objectives are to obtain reasonable assurance about whether the project financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a hig h level of assurance but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate , they could reasonably be expected to influence the economic decisions of users taken on the basis of this project financial statements . As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the project financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery , intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the program's internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Controlling Officer. • Conclude on the appropriateness of the Controlling Officer's use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the program's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the project financial statements or, if such disclosures are inadequate, to modify our opinion . Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or cond itions may cause the program to cease to continue as a going concern . • Evaluate the overall presentation , structure and content of the project financial statements , including the disclosures, and whether the project financial statements represent the underlying transactions and events in a manner that achieves fair presentation . We communicate with the Controlling Officer regarding, among other matters, the planned scope and timing of the aud it and significant audit findings , including any significant deficiencies in internal control that we identify during our -~✓ l!o/7)~ Grant Thornton J el Mwenelupembe hartered Accountant (Malawi) Partner Lilongwe, Malawi Date ;.1 'Z> E-<:.f"i~2021 5 THE; MALAWI GOVERNMENT-MINISTRY OF AGRICULTURE AGRICULTURE SECTOR WIDE APPROACH-SUPPORT PROJECT II IDA PROJECT NUMBER P164445 ST TEMENT OF CASH AND RECEIPTS AND PAYMENTS Fo r the year ended 30 June 2021 MK'000 USD'000 MK'000 USD'0O0 Note 2021 2021 2020 2020 Re eipts Di ct payments 6 2,834,938 3,740 w rid Bank IDA advance receipts 7 10,899,350 14,253 12,812 .793 17, 507 G vernment contribution 9 160,671 218 143,704 195 E hange gains/(losses) 10 88,454 - -- (77.553) - - -- 13,983,413 ..1.8..2.11 12 8Z8 911 ~ Prments P emotion of diversified crop production and m nagement system 1,587,396 2,123 4,753 ,854 6,387 P emotion of integrated soil fertility anagement 282,546 379 580 ,155 774 If provement of rural unpaved roads 11,059,552 14,571 4,644 ,021 6,365 I plementation of support district councils 323,311 428 1,059 ,369 1,453 l~stitutional capacity building 17,225 23 569 ,337 766 trengthening M&E and agricultural statistics 430,077 575 1,058 ,530 1,413 reject coordination 623,166 ~ 1,338,360 ~ otal payments 11 14,323,273 -18...9.3.8. 11003 626 .18Jlli2 ecrease in cash 1339,890} . am /1 121682\ ~ ash at beginning of the year 2,974,276 4,046 4,098 ,958 5,296 ~ ecrease in cash {339,890} {727} (1 ,124,682) 112.§Ql 2,634,416 3,319 2,974 ,276 4 046 ash at year end 12 2 634 416 ~ 2 971 2Z6 AJl16 he statement of cash receipts and payments for the project was approved for issue on the 021 and is signed on its behalf by: rr 'f'kce ~bf r SECRETARY FOR AGRICULTURE DIRECTOR OF FINANCE 6 THE MALAWI GOVERNMENT-MINISTRY OF AGRICULTURE AGRICULTURE SECTOR WIDE APPROACH-SUPPORT PROJECT II IDA PROJECT NUMBER P164445 NOTES TO THE PROJECT FINANCIAL STATEMENTS For the year ended 30 June 2021 1. Audit executive summary Audit of the project financial statements of Ministry of Agriculture (MoA) - Agriculture Sector Wide Approach- Support Project II " managed by Ministry of Agriculture the funds provided by World Bank" under financing agreements for the year July 1, 2020 through June 2021 . Background and project identification The Government of Malawi is implementing Second Agricultural Sector Wide Approach Support Project (ASWAp-SP II ) through Ministry of Agriculture . Second Agricultural Sector Wide Approach Support Project (ASWAp-SP II) is a follow up to ASWAp-SP I that was implemented between 2014 and 2016 . The project was declared effective on 25 April 2018 and will close on 31 December 2021. The project is currently being financed by five donors namely the EU , Irish Aid , Flanders , USAID and Norway as a Multi Donor Trust Fund managed by the World Bank. So far, only three donors have pumped in their contributions, namely EU , Irish Aid and Flanders, however, there is also commitment from the USAID and Norway to support the project. Project development objective The Project Development Objective (PDO) of ASWAp-SP II is to improve productivity and market access of selected commodities for small-holder farmers in targeted districts of Malawi. The ASWAp-SP II is addressing the PDO through a community demand driven approach, building on lessons and successes of ASWAp-SP I. Key outcomes i) Increasing production volume of selected agricultural commodities/value chains across the targeted districts with equal weight and measures given to each commodity . ii) Linking/connecting agricultural marketing centers that are used for marketing of both inputs and agricultural produce by the rehabilitated roads in the project districts. iii) Reaching farmers with agricultural assets or services of wh ich 50% are female farmers. Project beneficiaries and implementation districts The project is expected to benefit 300,000 households (of which 50% are female) which shall incl ude , wherever possible (i) smallholder farmers and local communities who will benefit from improved agricultural interventions and jobs, (ii) road users from improved road infrastructure , (ii i) staff trained , and (iv) institutions including: MoAIWD, Roads Authority, District Councils and the construction industry . The project will ensure that women and youth are well represented as beneficiaries of the project. Project implementation is in 12 districts. Selection of the districts was based on the following criteria as agreed by Government and donors: (i) actual and potential agricultural productivity , (i i) poverty levels , and (iii) population . This is aimed at ensuring a comprehensive package of support from production to marketing of selected agricultura l commodities/value chains, while targeting smallholder and emerging farmers. 7 irHE MALAWI GOVERNMENT-MINISTRY OF AGRICULTURE GRICULTURE SECTOR WIDE APPROACH-SUPPORT PROJECT II DA PROJECT NUMBER P164445 OTES TO THE PROJECT FINANCIAL STATEMENTS ~ For the year ended 30 June 2021 2. SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies adopted in the preparation of the project financial statements are set out below: 2.1 Basis of accounting The project financial statements have been prepared in accordance with the International Public Sector Accounting Standard ("IPSAS") - Financial Reporting under the Cash Basis of Accounting as at the period end . 2.2 Reporting currency The Project financial statements are presented in Malawi Kwacha and the United States Dollar. All amounts have been rounded up to thousands . 2.3 Funds Funds represent funding from the donors which are transferred to Reserve Bank of Malawi. 2.4 Basis of measurement The Project financial statements have been prepared on a historical cost basis. 2.5 Functional and presentation currency Items included in the project financial statements are measured using Malawi Kwacha , as functional currency of/also the primary economic environment in which the entity operates. The Project financial statements are also presented in US Dollars as the Ministry's presentation currency . 2.6 Payments Payments are made in Malawi Kwacha through the various operating bank accounts. 2.7 Foreign currency recognition The transactional currency for the Program is in Local Cu rrency which is the Malawi Kwacha . Funds from the Ministry of Agriculture - ASWAp II are received in US Dollars into a US Dollar Denominated Bank Account. These funds are transferred into a Malawi Kwacha Accou nt using an exchange rate ruling at the date of tra nsfer the central bank (Reserve Bank of Malawi). All payments in the Local Currency are converted to US Dollar using this same rate until the respective resources are fully utilized . Foreign exchange gain/loss - At the end of the reporting period , the balance in the Local Currency Account is reconverted to the US Dollar at the exchange rate ruling as at 30 June of that year. The difference between the use of the original rate and the current rate being used brings out the exchange gain or (loss) which ever the case may be. 2.8 Motor vehicles and equipment Motor vehicles and equipment and all other fixed assets purchased by the project are expensed in the period of purchase and are not depreciated . 2.9 Government contribution These amounts re late to Government officers that are engaged on project activities. It comprises of salaries of these officers which the government contributes . 2.9 Comparative information Comparative information for the project is restated where applicable due to prior period material errors or changes in accounting policies . 2.10 Cash Cash comprise cash on hand and cash equivalents comprising balances held with commercial banks and the Reserve Bank of Malawi. 8 liTHE MALAWI GOVERNMENT-MINISTRY OF AGRICULTURE GRICUL TURE SECTOR WIDE APPROACH-SUPPORT PROJECT II IDA PROJECT NUMBER P164445 NOTES TO THE PROJECT FINANCIAL STATEMENTS For the year ended 30 June 2021 3. Capital expenditure MK'000 USD,000 MK'000 USD,000 2021 2021 2020 2020 Motor vehicles 270,075 366 Office equipment 47,220 546,298 _HJ_ ~ 8.16...31.3. 1lQl 4. Operating costs Total expenses 14,323,273 18,938 14,003,626 18,952 Total assets (47,220) ----1§11 (816,373) (1,107) 14 276 053 ~ 13 187 253 -11..84.5 5. Cash and bank balances ASWAp II Designated 250,085 310 541 ,138 734 ASWAp II Holding 189,522 266 422 ,847 594 ASWAp RFA DA 829,139 1,029 1,634 ,654 2 ,218 ASWAp RFA Holding 1,321,317 1,655 357 ,502 474 ASWAP II - Karonga 121 279 ASWAP II - Mzuzu 3 596 ASWAP - Kasungu 1,260 2 2 ,084 3 ASWAP - Lilongwe 24,372 33 1,464 2 ASWAP - Machinga 2,395 3 42 ASWAP - Blantyre 9,257 12 2,148 3 ASWAP - Bvumbwe 2,759 4 5,926 9 ASWAP - Chitedze 5,049 6 2,851 6 ASWAP - Lunyangwa (863) _ill 2 745 __3 Cash an cash balances 2.634.416 ~ 2 974 276 A.Q.4fi The overdraft represents overdrawn (cash book position ) as the Ministry does not have an overdraft facility . 6. Direct payments 24.08.20- FNC/Meshozi Joint Venture 156,097 211 04.09.20- SOS Construction 361,592 488 07.10.20- Victory Vision Civil Engineering 195,411 263 22.10.20- SOS Construction 90,752 122 29.10.20- DIKA Construction Company 97,705 131 24.11 .20- DIKA Construction Company 84,760 113 04.12.20- China Rai lway 20 Bureau Group Corp. 78,171 103 04.12.20-Sempha Investment Company Ltd 85,738 113 04.12.20- DIKA Construction Company 112,087 147 07.12.20-TAHIT Networks 158,677 207 08.12.20- FNC/Meshozi Joint Venture 138,335 182 15.12.20- Sempha Investment Company Ltd 91,200 120 22.12.20- Master Construction 112,405 148 22.01 .21- Master Construction 108,868 143 22 .01 .21- China Railway 20 Bureau Group Corp. 117,311 153 22.01.21- DIKA Construction Company 85,376 111 25.01 .21- Einstein Construction Limited 94,394 124 26.02 .21- Sempha Investment Company Ltd 292,471 379 09.03.21- DIKA Construction Company 105,027 136 18.03.21- TAHIT Networks 185,157 239 29.03 .21- SOS Construction 83,404 ---1QI 2.834.938 ~ These are payments paid by donor direct to the suppliers on request by Ministry of Ag ri cultu re and Roads Fund Administration . 9 HE MALAWI GOVERNMENT-MINISTRY OF AGRICULTURE GRICUL TURE SECTOR WIDE APPROACH-SUPPORT PROJECT II IDA PROJECT NUMBER P164445 NOTES TO THE PROJECT FINANCIAL STATEMENTS For the year ended 30 June 2021 7. World Bank IDA advance receipts MK'000 USD'000 2021 2.0.2.1 04.09 .2020 Designated Account HQ 2,254,093 3,000 04.09.2020 Designated Account RFA 1,728,135 2,300 10.12.2020 Designated Account RFA 3,879,699 5,078 07.04.2021 Designated Account RFA 3,037,423 3,875 10.899,350 ~ 2020 2020 27.08.2019 ASWAP RFA Designated Account 360 ,505 500 2.12.2019 Designated Account RFA 5,496 ,586 7,465 6.12.2019 ASWAP RFA Designated Account 6,955 ,702 9,542 12 812 793 ~ 8. World Bank IDA financing MK'000 USD'000 MK'000 USD'000 Opening balance 2021 2021 2020 2020 Direct payments Note 6 2,834,938 3,740 4,098,958 5,296 Transfer to bank account Note 7 10,899,350 14,253 12,812,793 17,507 13.734.288 ~ 16911751 22...80.3 9. Government contribution Total Government contribution 143 704 These relate to Ministry of Agriculture officers that are engaged on project activities. These contributions are for salaries to these officers which the Min istry pays and proportional to the amount they spent on the project activities. 10. Exchange gains Closing designated account balances in Malawi Kwacha 1,079,224 1,339 2,253 ,345 3,060 Translated Designated Account closing ba lances in (990,770) (1,339) (2,175,792) (3,060) Ma lawi Kwacha. 88,454 77 553 11. Project expenditure Promotion of diversified crop production and management system 1,587,396 2123 4,753 ,854 6,388 Promotion of Integrated Soil Fertility Management 282,546 379 580,155 774 Improvement of Rural Unpaved Roads 11,059,552 14,571 4,644 ,021 6,365 Implementation Support to the District Council 323,311 428 1,059,369 1,453 Institutional Capacity Building 17,225 23 569,337 766 Strengthening M&E and Agricultural Statistics 430,077 575 1,058,530 1,412 Project Coordination 623,166 ~ 1,338,360 1 794 14.323.273 ~ 14 003 626 ~ 12 . Cash and bank balances at the end of the year Cash and cash balance 2.634.416 2 974 276 10 THE MALAWI GOVERNMENT-MINISTRY OF AGRICULTURE GRICULTURE SECTOR WIDE APPROACH-SUPPORT PROJECT II DA PROJECT NUMBER P164445 NOTES TO THE PROJECT FINANCIAL STATEMENTS For the year ended 30 June 2021 13. Related parties In the context of the project with the project, related party balances include transactions made by any of the following parties: • World Bank • Malawi Government • Roads Fund Adm inistration • Roads Authority The project undertakes to disclose the nature of related party relationships , types of transactions, and the elements of the transactions necessary for the understanding of the annual financial statements. The details of the balances are shown in the statement of cash receipt and payments under appropriate notes. The following transactions took place between the project and its related parted parties : MK'000 USD'000 MK'000 USD'000 2021 2021 2020 2020 World Bank Direct payments 2,834,938 3,740 World Bank !DA advance receipts 10,899,350 14,253 12,812,793 17 507 13.734.288 ~ 12812793 ~ Malawi Government Government contribution ~ .218. 143 704 195 Road Fund Administration and Roads Authority Improvement of rural unpaved roads 11,059,552 4 644 021 14. Foreign exchange rates and inflation The average of the year-end buying and selling rates of the major foreign currencies affecting the performance of the project are stated below, together with the National Consumer Price Index, which represents the official measure of inflation. 2021 2020 Kwacha/Euro 919 827 Kwacha/US Dollar 784 736 Kwacha/South Africa Rand 52 42 Inflation rate (%) At the time of signing the project financial statements the exchange rates were as follows: - Kwacha/Euro 1019 874 Kwacha/US Dollar 824 740 Kwacha/South Africa Rand 60 44 Inflation (%) 15. Contingent assets and contingent liabilities There are no contingent assets and/ or liabilities requiring disclosure in this project financial statements . 16. Commitments There are no commitments requ iring disclosure in this project financial statements. 17. Subsequent events There are no significant events that have occurred after year end which necessitates adjustments to or disclosure in the project financial statements. 11 THE MALAWI GOVERNMENT MINISTRY OF AG RIC ULTURE Agriculture Sector Wide Approach-Support Project II IDA PROJECT NUMBER P164445 SUPPLEMENTARY INFORMATION The following pages do not form part of this Project financial statements . HE MALAWI GOVERNMENT-MINISTRY OF AGRICULTURE AGRICULTURE SECTOR WIDE APPROACH-SUPPORT PROJECT II IDA PROJECT NUMBER P164445 STATEMENT OF FINANCIAL POSITION For the year ended 30 June 2021 2021 2020 Assets MK'000 USD'000 MK'000 USD'000 Non-current assets Motor vehicles 270,074 365 Office equipment's 47,220 63 546,298 741 Project operating costs 14,276,053 18,875 13, 187,254 17 846 Total non-current assets 14,323,273 18,938 14,003,626 18,952 Current assets Bank balances 2,634,416 3,319 2,974,276 4 046 Total current assets 2,634,416 3,319 2,974,276 4 046 Total assets 16 957 689 ~ 16 977 903 ~ Financing World Bank IDA financing 16,708,564 22,039 16,911,752 22 ,803 Government contribution 160,671 218 143,704 195 - Exchange gains/(losses) 88,454 16,957,689 - -- (77,553) -- Total financing ~ 16 977 903 ..2..2Jilla 13 "R:JRF--- - - - - - - - - - - - - - - - -- - - - -- - - - - -- - - - - - - - -- - -- -- - - lttE-MAl::AWt-G0VERNMENT~M•NfSTRY 0F-A-GRlel:H:-- AGRICUL TURE SECTOR WIDE APPROACH-SUPPORT PROJECT II IDA PROJECT NUMBER P164445 DATE CHEQUE NUMBER INVOICE NUMBER QTY SUPPLIER CATEGORY DESCRIPTION COST COST MK USD 11/08/2020 00697 4/006961 14550 440 Tee & Tee General Dealers OE Weiqhinq scales 46 ,031,480 61,497 20/06/2021 0008006/008007 /007864 1047 1 Mobile City OE Desk top computer 1,188,300 1,588 47 ,219,780 63,084 14